INVESTMENT OBJECTIVE AND POLICY
The Company’s objective is to provide Shareholders with an attractive and growing level of income, together with the potential for capital growth, from investment in Songs and associated musical intellectual property rights, in accordance with its Investment Policy.
The Company’s investment policy is to diversify risk through investment in a Portfolio of Songs and associated musical intellectual property rights (including, but not limited to, master recordings and producer royalties). The Company seeks to acquire 100 per cent. of a songwriter’s copyright interest in each Song, which would comprise their writer’s share, their publisher’s share and their performance rights. In appropriate cases, however, the Company may not acquire all three elements of the songwriter’s interest. The Company acquires interests in Songs which are sole authored or co-authored. The Company may also acquire interests in Songs jointly with another purchaser. Each Song is considered by the Company to be a separate asset.
The Company, directly or indirectly via portfolio administrators, enters into licensing agreements, under which the Company receives payments attributable to the copyright interests in the Songs which it owns. Such payments may take the form of royalties, licence fees and/or advance payments, including:
- mechanical royalties – when a copy of a Song is made, whether physical (e.g. CDs, DVDs) or digital (e.g. permanent downloads, streaming, webcast);
- performance royalties – when a Song is performed live or broadcast on TV or Radio, or when a song is streamed online; and
- synchronisation fees – when a Song is used in another form of media (e.g. movie, TV show, video game, advertisement).
The Company focuses on delivering income growth and capital growth by pursuing efficiencies in the collection of payments and active management of the Songs it owns.
The Company may acquire Songs for consideration consisting of cash, Shares or a combination of cash and Shares, and payment of part of the consideration may be on deferred terms. The Company may acquire Songs or Catalogues directly, or indirectly by acquiring the entity through which such Songs or Catalogues are held.
Whilst the Company does not intend to sell the Songs it owns, it may make disposals of Songs where it considers such a disposal to be in the best interests of Shareholders.
The Investment Adviser is responsible for identifying Catalogues for potential investment by the Company, in accordance with the Company’s Investment Objective and Policy and subject to approval by the Board. Pursuant to the Investment Advisory Agreement, the Investment Adviser is also responsible for the ongoing management of Songs acquired by the Company with a view to increasing royalty income and collection as well as developing strategies to maximise the earning potential of a Song through improved placement and usage, and regular supervision of portfolio administrators and royalty collection agents, subject to the oversight of the Directors.
The Investment Adviser continues to believe that a combination of its expertise in selecting and managing Songs (in cooperation with portfolio administrators), should enable attractive returns to be realised from the Songs that the Company acquires. The Investment Adviser believes that its relationships are key to sourcing Catalogues and synch opportunities. The Investment Adviser believes that the Company has a competitive advantage over most of the major publishers because the Company is advised by the Investment Adviser and its Advisory Board, a carefully assembled panel of leading music industry figures, from recording artists to songwriters, producers to managers, and lawyers to consultants, who the Investment Adviser believes are better placed to advise on any given Song’s potential market, reach and popularity. The Investment Adviser’s Team will also have a lower ratio of Songs to each individual in the team managing the Songs, thereby, in the opinion of the Investment Adviser, allowing the Investment Adviser to target synchronisation opportunities more effectively, generating enhanced returns.
The Company’s Portfolio comprises Catalogues, and the Investment Adviser is seeking to continue to identify Catalogues, which include Songs with the following characteristics:
- proven hit Songs with a track record of success and cultural impact;
- culturally influential and therefore likely to be continuously played and/or covered by new recording artists;
- under-exploited and for which the Investment Adviser has identified potential synch or cover opportunities; and
- offering upside from improving the administration of collection of the royalty income and through negotiating competitive fees with the relevant portfolio administrator.
The Investment Adviser believes that its extensive experience across a broad spectrum of music genres, together with its relationships with songwriters and recording artists in the music industry, means it is well positioned to continue to source opportunities for the Company to invest in a diverse range of attractive Catalogues and then assist the Company in maximising earnings from them.